On the bench

As more clients back off, professional services feel the pinch

In the consulting world, they call it being on the beach or on the bench.

In the consulting world, they call it being on the beach or on the bench.

That means a consultant without a paying assignment hangs out at headquarters, doing surveys, writing business proposals and designing new billing programs for the company.

In a good economy, the number of consultants who remain in-house, waiting for an assignment, is low. Only 25% to 30% of their time is not billed to clients. In boom times, the percentage is even lower.

But as small and large companies cut costs in anticipation of a recession, they are cutting back on consultants. That's beached and benched hundreds of them at the Big Five consulting firms, slashing the percentage of their time they can bill to a client as low as 40% to 45% in some practice areas, analysts say.

Whether their clients' perception of an economic downturn is real or imagined, the belt-tightening is tangible. Management consultants, Internet strategists and accountants--who collectively form a mainstay of the city's economy--are seeing a shift in the type and a reduction in the volume of services their clients require.

Gone are the days when companies jumped headlong into Internet projects that weren't justified by a return on investment. Gone, too, is the demand for ancillary fee-based services that accountants provide to clients involved in mergers and acquisitions. Deadlines to automate manufacturing plants are being extended to 12 months from six, and the services consultants provide on such projects are being postponed.

An in-depth examination of the economic climate, including complete coverage of this story, appears in the March 26 issue of Crain's Chicago Business.